Stocks across the board were hammered. Merrill Lynch ( MER) and Morgan Stanley ( MS) both sank 25%, and Goldman Sachs ( GS) slumped 7%. AIG ( AIG) gave back more than 9%.

Bank of America ( BAC), which was aiming to raise $10 billion in a stock offering, sank 26%. The company also said, following the close Monday, that it was cutting its dividend and that third-quarter earnings fell sharply from the same period last year.